In response to the hastily advanced draft amendment to Article 7(1¹) of the Law on Charity and Sponsorship No. I-172, and in support of the position of the National NGO Coalition, we addressed Members of the Seimas and the Office of the President, urging them not to support the proposal to reintroduce budgetary schools as eligible recipients of the 1.2% personal income tax allocation. Under the current regulation, this support may be allocated only to non-governmental organizations. More detailed arguments are provided in the full statement below.

To the Members of the Seimas of the Republic of Lithuania

To the Office of the President of the Republic of Lithuania

Regarding the Draft Law Amending Article 7(1¹) of the Law on Charity and Sponsorship No. I-172

On behalf of the National Association of Cultural and Creative Industries and its members, we appeal to you and urge you not to support the draft amendment to Article 7(1¹) of the Law on Charity and Sponsorship No. I-172, which would restore the possibility for schools to collect 1.2% personal income tax support.

We recall that the 1.2% personal income tax allocation mechanism was created specifically to strengthen civic organizations that do not receive direct and stable budgetary funding. Later, the allocation procedure became distorted when budgetary institutions were also granted the right to receive this support. As early as 2009, the National Audit Office, in its opinion on the implementation of the 2008 state budget, emphasized that allocating 1.2% personal income tax support to budgetary institutions distorts the original purpose of the support mechanism. This flaw in the legal framework was corrected in 2022 through amendments to the law, which established that only non-governmental organizations would be eligible to receive this support as of 2024.

For NGOs operating in the cultural and creative sector, 1.2% personal income tax support is of particular importance. We also note that the 2026 state budget already foresees a significant reduction in funding for culture, which will directly affect the non-governmental cultural sector and access to quality culture, especially in the regions. Therefore, the adoption of these amendments to the Law on Charity and Sponsorship would further weaken these organizations, as they would once again face unfair competition for this support from financially secure budgetary institutions.

We disagree with the arguments put forward in favour of changing the current procedure, which has been in force for only one year and under which 1.2% personal income tax support may be allocated only to non-governmental organizations. On the contrary, the first year has confirmed the relevance and effectiveness of the current model and has disproved assumptions that certain organizations — such as schools or religious communities — would be unable to make use of this funding source.

Under the current regulation, state and municipal schools can continue to receive both financial and material support, as educational institutions have the status of support recipients under the law. In addition, school communities may establish non-governmental organizations and collect 1.2% personal income tax support through them. We emphasize that some foundations established by school communities collected more 1.2% personal income tax support in 2024 than the schools themselves did in 2023. This system ensures fair and equal conditions for all organizations seeking to attract this support.

Religious communities, associations, and centres may also continue to receive 1.2% personal income tax support if they carry out not only religious activities but also, for example, social or other activities as defined in the Law on the Development of Non-Governmental Organizations.

The current system, under which budgetary institutions may establish their own foundations and collect personal income tax support through them, has increased transparency and empowered school communities to make independent decisions regarding the use of support.

In 2026, the education budget is being increased by half a billion euros, while the budget of the Ministry of Culture is being reduced by more than €4.5 million. The current 1.2% personal income tax support system does not prevent schools from receiving this support. For cultural non-governmental organizations, however, it may be a matter of survival, especially as targeted funding for culture is being systematically reduced.

We therefore call on you to vote against the draft amendment to Article 7(1¹) of the Law on Charity and Sponsorship No. I-172.

Respectfully,

Chair of the Board
National Association of Cultural and Creative Industries